Merchants have always issued credit in one form or another directly to customers. But the idea that a bank would issue credit to purchase anything then, eventually, collect from their customer is newer.
In 1946, after WWII, John C. Biggins invented the first universal credit card, called “Charg-It.” However, the card only worked at participating stores within two blocks of his employer, the Flatbush Bank of Brooklyn, NY.
Eventually, Frank McNamara invented a widely accepted card, Diners Club, in 1950. McNamara worked at a commercial credit company, Hamilton Credit. Diners Club charged customers a 7-percent per transaction fee to use the card.
Manhattan restaurants quickly adopted the card because it allowed diners to pay without worrying about cash, simplifying the dining experience. Restaurants often offered a 10-percent discount for using the card, to lure customers. This 10-percent discount more than offset the cards 7-percent fee. Eventually, credit card companies simply charged merchants a fee to accept the cards.
A decade later, Diners Club had 42,000 customers and 330 establishments accepted the card. However, a new entrant was on the rise. Bank of America released the Bank Americard in 1958. Their card was later renamed visa. American Express also opened in 1958.
McNamara sold his interest in Diners Club to Alfred Bloomingdale in 1952. He quickly built a real-estate empire that just as quickly went bust. McNamara, the inventor of one of the most profitable types of financial technology in history, lost everything and died of a heart attack, bankrupt, in 1957.
Ron Klein, who invented the magnetic stripe for the credit card, also made no money from that innovation. It’s unknown what happened to Biggins besides that he died in 1971, at age 61, and his obituary mentions the early credit-card.